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Notes to Accounts of Kansai Nerolac Paints Ltd.

Mar 31, 2015

Note 1.1

The Company has given on lease, Colour Dispenser to its dealers. Particulars in respect of such leases are as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the Balance Sheet date are Rs. 191.38 Crores (2013-2014Rs.168.57 Crores) and Rs. 145.54 Crores (2013-2014Rs.130.18 Crores) respectively.

(ii) Depreciation recognised in the Statement of Profit and Loss is Rs. 15.56 Crores (2013-2014Rs.15.10 Crores)

(b) The lease agreements are generally for a period of three years. However, the corresponding lease rentals may be receivable for a shorter period or may be waived off. The minimum aggregate lease payments to be received in future is considered as Rs. Nil. Accordingly, the disclosure of the present value of minimum lease payments receivable at the Balance Sheet date is not made.

Rs. in Crores

Year Ended Year Ended 31st March, 31st March, 2015 2014

Note 2.1:

Miscellaneous Expenses includes net loss of inventory due to flood Rs. 0.07 Crores (loss of inventory due to flood Rs. 5.21 Crores, netted off with insurance claim received/receivable Rs. 5.14 Crores)

Note 3: contingent Liabilities and commitments (to the extent not provided for)

Claims against the Company not acknowledged as debt:

Corporate guarantee given to HDFC Bank for employee loans 1.41 1.41

Service Tax. 3.22 —

Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 3.68 5.21

8.31 6.62

The Company has made adequate provisions in the accounts for claims against the Company related to direct and indirect taxes matters, except for certain claims not acknowledged as debts, totalling to Rs. 3.22 Crores (2013-2014 Rs. Nil) from the Service Tax Authorities, in respect of disallowance of Service Tax Cenvat Credit shown in Note 26. In addition, the Company is subject to other legal proceedings in respect of other matters arisen in the ordinary course of business. The Company''s management is of the opinion that the ultimate liability in respect of these litigations shall not exceed the amount provided for in books of account, and shall not have any material adverse effect on the Company''s operation and financial position.

Note 4: Related Party Disclosures

(i) (a) Names of related parties and nature of relationship where control exists are as under:

Holding Company : Kansai Paint Co., Ltd., Japan

Subsidiary Company : Kansai Paints Nepal Pvt. Ltd.

(b) Names of other related parties and nature of relationship where there are transactions with related parties:

Fellow Subsidiary Companies

: Kansai Paint Philippines Inc.

Kansai Coatings Malaysia SDN. BHD. Kansai Paints Europe Ltd.

Key Management Personnel

: Mr. H. M. Bharuka, Managing Director Mr. P D. Chaudhari, Wholetime Director Mr. P D. Pai, Chief Financial Officer Mr. G. T. Govindarajan, Company Secretary

B. Defined Benefit Plan:

(a) Contribution to Provident Fund managed by the Trust set up by the Company:

The Company has contributed Rs. 1.48 Crores (2013-2014Rs.1.50 Crores) to the Provident Fund Trust. In view of the issue of final guidance note by the Acturial Society of India for measurement of provident fund liabilities, the actuary has accordingly provided valuation and other related information for disclosure as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the Guidance issued by the Accounting Standard Board of the Institute of Chartered Accountants of India.

vi. a. The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. Expected rate of return on assets is determined based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

(c) Compensated Absences:

The increase in provision for compensated absences for the year is Rs. 0.18 Crores (decrease in provision 2013-2014Rs.0.25 Crores)

Note 5: Segment Reporting

As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under Companies (Accounting Standard) Rules, 2006.

Note 6: Corporate Social Responsibilities

Sec. 135 of the Companies Act, 2013 requires the Board of Directors to ensure that the Company spends in every financial year at least 2% of the average net profits of the Company made during the three immediately preceding financial years on Corporate Social Responsibility. Accordingly, the Company has spent Rs. 4.51 Crores towards Corporate Social Responsibility Activities. In accordance with the ''FAQ on Provisions of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 and Rules thereon'', issued by the Institute of the Chartered Accountants of India, this amount has been recorded and disclosed as an appropriation of profit in the Financial Statements for the year ended 31st March, 2015.

(a) Gross amount required to be spent by the Company during the year Rs. 6.11 Crores.

(b) Amount spent during the year on:


Mar 31, 2014

Note 1: Contingent Liabilities

Claims against the Company not acknowledged as debt:

Notice from Haryana State Industrial and Infrastructure Development Corporation for enhanced costs for Bawal factory land - 39.01

Corporate guarantee given to HDFC Bank for employee loan 11.16 11.16

11.16 50.17

Note 2: Related Party Disclosures

(i) (a) Names of related parties and nature of relationship where control exists are as under:

Holding Company :Kansai Paint Co., Ltd., Japan

Subsidiary Company :Kansai Paints Nepal Pvt. Ltd.

(w.e.f. 01.10.2012)

(b) Names of other related parties and nature of relationship where there are transactions with related parties: Fellow Subsidiary Companies : Kansai Paint Philippines Inc.

Kansai Coatings Malaysia SDN. BHD. Kansai Paints Europe Ltd.

Key Management Personnel : Mr. H. M. Bharuka, Managing Director

Mr. P. D. Chaudhari, Wholetime Director

Note 31: Employee Benefits

A. Defined Contribution Plan:

Contribution to defined contribution plan, recognised in the Statement of Profit and Loss under Contribution to Provident and Other Funds in Employee Benefits for the year are as under:

B. Defined Benefit Plan:

(a) Contribution to Provident Fund managed by the Trust set up by the Company:

The Company has contributed Rs. 14.96 Million (2012-2013 Rs. 14.79 Million) to the Provident Fund Trust. In view of the issue of final guidance note by the Actuarial Society of India for measurement of provident fund liabilities, the actuary has provided valuation and other related information for disclosure as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the guidance issued by the Accounting Standard Board of the Institute of Chartered Accountants of India.

Note 3: Segment Reporting

As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the Financial Statement are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under Companies (Accounting Standard) Rules, 2006.


Mar 31, 2013

Note 1.1

The tangible assets at the Company''s pigment manufacturing unit at Kavesar and paint manufacturing units at Lower Parel and at Vatwa, have been retired from active use. Accordingly, the fixed assets (other than land) at those manufacturing units had been written down to Rs. 2.22 Million on the basis of valuation reports [balance provision for write down in the value of fixed assets as at the end of the year Rs. 5.89 Million (2011-2012 Rs. 7.00 Million)]. During the year, an amount of Rs. 1.11 Million (2011-2012 Rs. 1.30 Million) has been written back consequent to charge on account of depreciation of an equal amount.

Note 1.2

The Company has given on lease, Colour Dispenser to its dealers. Particulars in respect of such leases are as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the Balance Sheet date are Rs. 1551.85 Million (2011-2012 Rs. 1518.91 Million) and Rs. 1174.95 Million (2011-2012 Rs. 1266.25 Million) respectively.

(ii) Depreciation recognised in the Statement of Profit and Loss is Rs. 124.31 Million (2011-2012 Rs. 141.61 Million).

(b) The lease agreements are generally for a period of three years. However, the corresponding lease rentals may be receivable for a shorter period or may be waived off. The minimum aggregate lease payments to be received in future is considered as Nil. Accordingly, the disclosure of the present value of minimum lease payments receivable at the Balance Sheet date is not made.

Figures in the brackets are the corresponding figures in respect of the previous year.

* Excludes commission and related contribution to Provident Fund and Superannuation Fund thereon for the year but includes commission and such related contribution thereon for the previous year paid in the current year. Note: No amounts pertaining to related parties have been provided for as doubtful debts. Also, no amounts have been written off or written back during the year.

B. Defined Benefit Plan:

(a) Contribution to Provident Fund managed by the Trust set up by the Company:

The Company has contributed Rs. 14.79 Million (2011-2012 Rs. 13.53 Million) to the Provident Fund Trust. In view of the issue of final guidance note by the Actuarial Society of India for measurement of provident fund liabilities, the actuary has provided valuation and other related information for disclosure as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the guidance issued by the Accounting Standard Board of the Institute of Chartered Accountants of India.

vi. a. The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. Expected rate of return on assets is determined based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

vii. The above information is certified by the actuary.

(c) Compensated Absences:

The decrease in provision for compensated absences for the year is Rs. 2.82 Million (2011-2012 decrease Rs. 0.90 Million)

Note 2: Segment Reporting

As the Company''s business activity falls within a single business segment viz. ''Paints'' and the sales substantially being in the domestic market, the financial statement are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under Companies (Accounting Standard) Rules, 2006.


Mar 31, 2012

Note 9.2

The tangible assets at the Company's pigment manufacturing unit at Kavesar and paint manufacturing units at Lower Parel and at Vatwa, have been retired from active use. Accordingly, the fixed assets (other than land) at those manufacturing units had been written down to Rs 2.22 Million on the basis of valuation reports [balance provision for write down in value of fixed assets as at the end of the year Rs 7.00 Million (2010-2011 Rs 8.30 Million)]. During the year, an amount of Rs 1.30 Million (2010-2011 Rs 1.64 Million) has been written back consequent to charge on account of depreciation of an equal amount.

Note 9.3

The Company has given on lease, Colour Dispenser to its dealers. Particulars in respect of such leases are as follows:

(a) (i) The gross carrying amount and the accumulated depreciation at the balance sheet date are Rs 1518.91 Million (2010-2011 Rs 1364.50 Million) and Rs 1266.25 Million (2010-2011 Rs 1124.64 Million) respectively.

(ii) Depreciation recognised in the Statement of Profit and Loss is Rs 141.61 Million (2010-2011 Rs 121.56 Million)

(b) The lease agreements are generally for a period of three years. However, the corresponding lease rentals may be receivable for a shorter period or may be waived off. The minimum aggregate lease payments to be received in future is considered as Nil. Accordingly, the disclosure of the present value of minimum lease payment receivable at the balance sheet date is not made.

Figures in the brackets are the corresponding figures in respect of the previous year.

* Excludes commission and related contribution to Provident Fund and Superannuation Fund thereon for the year but includes commission and such related contribution thereon for the previous year paid in the current year.

Note: No amounts pertaining to related parties have been provided for as doubtful debts. Also no amounts have been written off or written back during the year.

B. Defined Benefit Plan:

(a) Contribution to Provident Fund managed by the Trust set up by the Company:

The Company has contributed Rs 13.53 Million (2010-2011: Rs 11.52 Million) to the Provident Fund Trust. In view of the issue of final guidance note by the Actuarial Society of India during the year for measurement of Provident Fund liabilities, the actuary has provided valuation and other related information for disclosure as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the Guidance issued by the Accounting Standard Board of the Institute of Chartered Accountants of India.

i. a. The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. Expected rate of return on assets is determined based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

ii. The above information is certified by the actuary.

Note 31: Segment Reporting

As the Company's business activity falls within a single business segment viz. 'Paints' and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 17 "Segment Reporting", notified under the Companies (Accounting Standards) Rules, 2006.

Note 32: Profit on Sale of long-term Investment

The Company had divested its entire stake in its erstwhile Associate Company, Nipa Chemicals Limited, for a consideration of Rs 257.25 Million.


Mar 31, 2010

1. The Company has made monthly payments aggregating Rs. 9.30 lacs (2008-2009 Rs. 9.72 lacs) and payments in respect of medical reimbursement aggregating Rs. 0.10 lac (2008-2009 Rs. 0.10 lac) towards post retirement arrangements to former Wholetime Directors.

2. As the Companys business activity falls within a single business segment viz. Paints and the sales substantially being in the domestic market, the disclosure requirements of Accounting Standard - 17 "Segment Reporting", notified under the Companies Act, 1956 is not applicable.

3. Related party disclosures

(i) (a) Names of related parties and nature of related party relationship where control exists are as under:

Holding Company : Kansai Paint Co., Ltd., Japan

Subsidiary Company : Kansai Coatings Malaysia SDN. BHD.

30th June, 2008)

(b) Names of other related parties and nature of relationship where there are transactions with related parties:

Fellow Subsidiary Companies : PT. Kansai Paint Indonesia Kansai Paint Philippines Inc Chongqing Kansai Paint Co.,Ltd. Kansai Resin (Thailand) Co. Ltd. Kansai Coatings Malaysia SDN. BHD. (w.e.f. 1st July, 2008)

Associate - company in which the Company has : Nipa Chemicals Limited substantial interest (i.e. more than 20% in voting power)

Key management personnel : Mr. H. M. Bharuka, Managing Director

Mr.P.D.Chaudhari, Wholetime Director (w.e.f. 1st May, 2008)

4. Employee Benefits

B. Defined Benefit Plan

(a) Contribution to provident fund managed by the trust set up by the Company:

According to the management, the actuary has opined that actuarial valuation cannot be applied to reliably measure provident fund liabilities in respect of fund managed by the trust set up by the Company in the absence of guidance from the Actuarial Society of India. Accordingly, the Company is currently not in a position to provide other related disclosures as required by Accounting Standard (AS) 15 (Revised) on Employee Benefits notified by the Companies (Accounting Standards) Rules, 2006 read with the Guidance issued by the Accounting Standards Board of the Institute of Chartered Accountants of India. Having regards to the assets of the fund and the return on investments, the entity does not expect any deficiency in the foreseeable future. Accordingly, no provision is required towards the guarantee given for notified interest rates. During the year, the Company has contributed Rs. 103.89 lacs (2008-09: Rs. 94.10 lacs) to the Provident Fund Trust.

vi. a. The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b. The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency and terms of the post-employment benefit obligations.

c. Expected rate of return on assets is determined based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

vii. The above information is certified by the actuary.

5. Derivatives Instruments

B. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

(a) Amounts payable in foreign currency

Euro 0.68 lac [2008-2009 - Euro 1.96 lacs] GBP 0.79 lac [2008-2009 - GBP Nil lac] JPY 423.45 lacs [2008-2009 - JPY 116.39 lacs] USD 45.45 lacs [2008-2009 - USD 1.15 lacs] CHF 0.04 lac [2008-2009 - CHF Nil]

(b) Advance payment in foreign currency for supplies

CHF 0.68 lac [2008-2009 - CHF 0.15 lac] Euro 0.50 lac [2008-2009 - Euro 0.95 lac] GBP 0.11 lac [2008-2009 - GBP 0.01 lac] JPY 146.82 lacs [2008-2009 - JPY 6.06 lacs] SGD Nil [2008-2009 - SGD 0.13 lac] USD 3.04 lacs [2008-2009 - USD 1.76 lacs]

6. Prior years figures were audited by a firm of chartered accountants other than B S R & Co, which have been regrouped and rearranged wherever necessary to confirm to current years classification.

 
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